(I) Explain any two advantages of centralized purchase. [2] (II) The following store transactions are provided for the month of Magh: Magh 1: Opening stock 500 units@ Rs. 20 Magh 7: Purchase 600…

(I) Advantages of Centralized Purchase

(II) FIFO Valuation (Periodic System)

Step 1 – Determine total units available

• Opening stock: 500 units @ Rs 20 = Rs 10,000
• Purchase on Magh 7: 600 units @ Rs 22 = Rs 13,200
• Purchase on Magh 15: 800 units @ Rs 23 = Rs 18,400

Total units = 500 + 600 + 800 = 1,900 units
Total cost of goods available for sale = 10,000 + 13,200 + 18,400 = Rs 41,600

Step 2 – Apply FIFO to the sales of 1,500 units

1. Sell the 500 units from opening stock (cost Rs 20).
2. Sell the 600 units from the Magh 7 purchase (cost Rs 22).
3. Remaining units to be sold = 1,500 − 500 − 600 = 400 units taken from the Magh 15 purchase (cost Rs 23).

Step 3 – Compute Closing Stock

After the above sales, the unsold units are the remaining portion of the Magh 15 purchase:

• Units left = 800 − 400 = 400 units
• Cost per unit = Rs 23

$$\text{Closing Stock}=400\times 23=\mathbf{Rs}9,200$$

Step 4 – Compute Cost of Goods Sold (COGS)

$$\text{COGS}=\text{Total cost of goods available}-\text{Closing Stock}$$ $$\text{COGS}=41,600-9,200=\mathbf{Rs}32,400$$

Result

• Closing Stock = Rs 9,200
• Cost of Goods Sold = Rs 32,400